A regulatory hearing panel has dismissed a motion for a stay of proceedings against Deutsche Bank Securities Ltd. for its role in the non-bank asset-backed commercial paper (ABCP) market collapse, and put the complex case off until next spring.

A hearing panel of the Investment Industry Regulatory Organization of Canada has dismissed a motion brought by Deutsche Bank requesting a stay of the disciplinary proceedings involving allegations that the investment dealer failed to disclose certain information to its clients who had invested in non-bank ABCP, and that it failed to ensure proper oversight of third-party ABCP, prior to that market freezing up in the summer of 2007.

The allegations have not been proven against Deutsche Bank.

The firm sought a stay of the proceedings against it, arguing that there are witnesses that could support to its defence, but as they aren’t members of the self-regulatory organization, or employees of a member, IIROC has no power to compel their testimony. “Deutsche Bank contends, therefore, that it is deprived of its right to make full answer and defence because it cannot force those persons, or any of them, to testify,” the hearing panel’s decision notes.

However, the panel ruled, “We have no hesitation in concluding that, in this case, the appropriate course is to allow the case to proceed to a hearing at which time the hearing panel will be able to assess whether prejudice has been demonstrated of such magnitude as to justify a stay. The request for a stay is, accordingly, dismissed.”

Additionally, the panel ruled that an adjournment in the case is required. “Because of the complexity of the case, and the voluminous disclosure which has been made, we think that the adjournment should be for a substantial period. We order that the hearing be adjourned to a date to be fixed as soon as practicable after April 4, 2011,” the panel said.

IE